Register a qualifying arrangement as an FHSA
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Who can apply
An individual can become the holder of an FHSA if they meet the conditions to be a qualifying individual. A qualifying individual is someone who:
- is a resident of Canada
- is at least 18 years of age
- is a first-time home buyer
An individual is considered to be a first-time home buyer if, at any time in the part of the calendar year before the account is opened or at any time in the preceding four calendar years, they did not live in a qualifying home as their principal place of residence (or what would be a qualifying home if it were located in Canada) that was owned (either jointly or otherwise) by the individual or by their spouse or common-law partner (if the individual has a spouse or common-law partner at the time of entering into an FHSA).
A qualifying home is defined as a housing unit located in Canada. It also includes a share of the capital stock of a cooperative housing corporation, where the holder of the share is entitled to possession of a housing unit located in Canada. However, where the context requires, such a share means the housing unit to which the share relates.
Conditions for registration
A qualifying arrangement must meet the following conditions to be registered as an FHSA:
- The arrangement must be entered into after March 31, 2023, and it must be between a qualifying individual and an issuer.
- The arrangement is one of three types:
- an arrangement in trust with a Canadian trust company
- an annuity contract with a company licensed to carry on an annuities business in Canada such as an insurance company
- a deposit with a person who is (or is eligible to become) a member of the Canadian Payments Association or who is a credit union that is a shareholder or a member of a body corporate referred to as a “central” in the Canadian Payments Act.
- The arrangement provides for contributions to be made under the arrangement to the issuer in consideration of, or to be used, invested or otherwise applied for the purpose of, the issuer making distributions under the arrangement to the holder.
- The issuer and the individual agree, at the time the arrangement is entered into, that the issuer will file with the Minister of National Revenue (“the Minister”) an election to register the arrangement as an FHSA. The election must be filed in prescribed form and manner with the Minister and include the Social Insurance Number of the qualifying individual. The election will be done via the FHSA Annual Information Return.
- At all times since the arrangement was entered into, it must comply with the following conditions:
- the arrangement requires that it be maintained for the exclusive benefit of the holder
- the arrangement prohibits, while there is a holder of the arrangement, anyone that is neither the holder nor the issuer of the arrangement from having rights under the arrangement relating to the amount and timing of distributions and the investing of funds
- the arrangement prohibits anyone other than the holder from making contributions under the arrangement
- the arrangement permits distributions to be made to reduce the amount of tax otherwise payable by the holder under section 207.021 of the Income Tax Act
- the arrangement provides that, at the direction of the holder, the issuer shall transfer all or any part of the property held in connection with the arrangement (or an amount equal to its value) to another FHSA of the holder or to a registered retirement savings plan (RRSP) or registered retirement income fund (RRIF) under which the holder is the annuitant
- if the arrangement is an arrangement in trust, it prohibits the trust from borrowing money or other property for the purposes of the arrangement
- the arrangement must cease to be an FHSA after the end of the holder’s maximum participation period
- arrangements issued by depositaries must include provisions stipulating that the issuer has no right of offset with respect to the property held under the arrangement in connection with any debt or obligation owing to the issuer
- the arrangement complies with prescribed conditions. (There are currently no prescribed conditions.)
The CRA will only approve a specimen plan that meets all registration conditions described in the Income Tax Act.
A holder's maximum participation period begins when they open their first FHSA and ends on December 31st of the year in which the earliest of the following events occur:
- the 15th anniversary of the date the holder first opened their FHSA
- when the holder turns 71 years old
- the year following the holder’s first qualifying withdrawal from their FHSA
Every effort should be made by the issuer to use in their application package the definitions found in the Income Tax Act, as applicable. If it is necessary to substitute other terms for those definitions, the substituted terms must be defined in accordance with the definitions in the Income Tax Act. All terms must be used uniformly throughout the documents.
How to apply for registration
- The qualifying individual fills out and signs an application form to certify that
- they are a qualifying individual and
- they are asking the issuer to file an election to register the qualifying arrangement as an FHSA
- The issuer files an election, in prescribed form and manner, with the CRA to register the qualifying arrangement as an FHSA.
- The election must be filed before March of the calendar year following the calendar year the arrangement was entered into.
- The election is to be done via the FHSA Annual Information Return.
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